Brubeck and the HIA argued that the DEA was attempting to add a new substance to the Controlled Substances Act, something it cannot do.

The DEA said the extract rule was simply a clarification of existing law and that it “makes no substantive change to the government’s control of any substance.”

The agency also scoffed at the suggestion that CBD is being made from anything but flowering parts of the cannabis plant because cannabinoids “are found in the parts of the cannabis plant that fall within the … definition of marijuana, such as the flowering tops, resin and leaves.”

The three-judge panel of the 9th Circuit agreed. Their decision means that the DEA was within its authority to clarify CBD as a “marijuana extract.”

Preparing for appeal

The hemp industry has 45 days to ask the 9th Circuit to take a second look at the case, the first step to an appeal. Assuming the 9th Circuit again sides with the DEA, the decision may be appealed to the U.S. Supreme Court.

Brubeck and a cannabis lawyer who worked on the case said the DEA decision isn’t a total setback. The court noted that the 2014 Farm Bill allows states to experiment with hemp policy, giving CBD producers some protection if they can prove their products were legally produced.

“We’re encouraged that the court found that the Farm Bill is in fact valid,” attorney Garrett Graff said.

CBD production and the DEA rule “can coexist for those growing and processing industrial hemp pursuant to the Farm Bill,” he said.